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The weekend business news is suggesting that the Chancellor will extend the provisions for expensing business investment for tax relief for at least a further year beyond the present limit of 2026.
see this from Openreach:
We’re committed to building the best digital future for the UK, so we’ve announced an ambitious plan to deliver Ultrafast full Fibre Broadband to 25 million homes and businesses by December 2026, if the right investment conditions are in place.
and note the last eight words!!!
If the Autumn statement does extend expensing then the benefit to BT over the next few years will be significant , from the latest AR Openreach spent £2.5 bill in the year to MAR 23, obviously not all of that expense will qualify BUT a very large chunk, must. Thus, over the next 3/4 years BT's notional tax deduction may well be reduced significantly .
A wet finger in the air: say £1bill (of total exp) pa X 25% for four years =£1bill which will drop through to the bottom line. Given that BT made just shy of £2bill last year, that's equivalent to an uplift of 12% Pa over the period.
Note, all source figures are from the latest AR all the rest is my very approximate speculation, and as ever I welcome constructive criticism.
An interesting snippet in the news today - Booths the upmarket norther based supermarket is to scrap all self service tills , allegedly in response to " customer feedback". I happen to have contact in one of their suppliers who told me recently that this was planned and the REAL reason is an explosion in theft. People using the tills passing low-value items through in place of higher-value items. I suspect that the staff cost savings from self-service will be if they aren't already swamped by " revenue loss due to theft. Relevance here? well if supermarkets have to add back staff to the checkouts then the costs of supply from stores will rise while the costs of delivery, esp. if/when fuel costs fall, will become more competitive. I still see the medium-term outlook for home delivery of groceries as positive. still holding may add at, or around, the 500p mark.
To put today's fall in context DGE says that LAC which constitutes 11% of worldwide sales may fall by 20%. So 20% of 11% = 2.2% of sales and probably less of profits. But, the SP is currently down 13..5% . Is the market crazy? IMO yes.
I'm adding, I've watched DGE for several years, it's a well-run business in a market which is not going to go away. Humans have been drinking alcohol for thousands of years and will, despite the medical evidence, continue to do so. DGE has grown its revenues steadily for a decade and earnings for a similar period (save the COVID year). The SP is back near the 2020 lows and while it may take time to recover, it will, I have taken the opportunity of this morning's panic fall (driven as ever, by HFT bots all panicking in unison- A feature of the markets nowadays). I hold, comfortable in the knowledge that the SP will be above, well above, current levels in the medium-term future.
I bought in her recently, in the 250's on the (somewhat unfortunate) basis that global conflict is good for this Co.s bottom line even though it is self-evidently bad. It seems obvious that military spending is bound to rise and stay high for some years, even if as surely we all hope, peace breaks out in Ukraine, Gaza...
Today's trading update for CHG looks very positive, they are understandably restructuring to meet the pace with which military priorities change but are forecasting an OP of £67 mill , which is ~40% higher than before, and I suspect will be exceeded in the coming years. I will hold/ add, if as sometimes happens stellar results are met with a short-term SP fall.
Alessandro... despite being UK-based banks BARC and LLOY are very different, LLOY profits are almost exclusively made in the UK, as you suggest, in the case of BARC they have a much broader base of operations which includes Barclaycard and a major investment banking arm, which competes with the likes of Goldman Sachs, Morgan Stanley, and CITI .. while I think they will eventually be driven out of investment banking because they cannot compete on scale, it does mean that they are far less dependent on the state of the UK economy. I fear that at the mo. NO UK banks are a sound investment, BARC's international reach makes them the best bet. should you wish to delve further into BARC try this, it's only 526 pages long!!!
https://home.barclays/content/dam/home-barclays/documents/investor-relations/reports-and-events/annual-reports/2022/AR/Barclays-PLC-Annual-Report-2022.pdf
good luck!
I have sold most (80%) of my holding this morning at 248p. That's not because I necessarily think this is the top (like all of us I just don't know) But because having bought at ~100p only a year ago I am happy to take my near 150% rise and bank it. I have become more cautious over my investing life and my mantra is to buy low and sell higher, obvious really, but a surprising number just don't do it.
My other guiding principle is that of opportunity cost. With the cash I draw from here, I hope to invest in other places where the SP has IMV, further, to run.( examples with no promises, DGO, RTO, PSN, CCL.) I may find that I miss further returns here but I can live with that.
For those of you still holding I don't see an SP crash from here, but I do suspect that there may be a retracement or flatlining. MKS has for many years found it hard to turn stable and rising revenues into profits, that may have changed permanently but I'm not convinced, I think management are better than in recent years and distinctly better than their immediate competitors but it is still a tough environment to make consistent profits in.
Today's euphoria may well dissipate to be followed by a more sober analysis.
whatever, I wish continued holders the best.
LGEN is one of my core holdings and while the SP hasn't excited in recent years I continue to add. My reasons were set out around the time of the "TRUSS meltdown "last year which as I explained then, had entirely positive implications for pension providers. Another boon is likely to be signalled in today's kings' speech (odd that isn't it?) when an outline of gov. plans to relax rules concerning how holders of very large sums can allocate them . In essence LGEN and other insurers (and possibly banks) will be allowed, even encouraged, to fund long-term infrastructure and speculative projects. Now the risks there are higher than merely sticking cash in bonds but the rewards are also considerably higher.
The outcomes of such changes as/when/if they occur will be several years in coming to fruition, but will IMV significantly impact returns here. I've added a few this morning and wouldn't be surprised to see at least a short-term bounce in the coming hours /days /weeks.
Today's news see
https://www.londonstockexchange.com/news-article/VOD/call-option-exercise-and-related-cancellation/16198312
indicates where some of the cash raised from the sale of Vod Spain is going. Vod has offered to call (ie buy back) up to 2bn euros of debt with a very long duration (2079) and at an interest rate of 3.1%.
Why they have chosen that debt is not clear to me except for the obvious fact that it is denominated in euros, the currency they presumably will receive for the sale.(Being about to complete the sale of a property in France I recognise the impact currency exchange has on profits!!).
If ALL the debt is offered for cancellation (V unlikely IMV) it would reduce Vods annual debt service costs by about 62 million euros, not a huge amount. For interest Vod also has euro-denominated debt of 750 mill at 6.5% due 2084 , that would be IMV the next best use of the cash.
Dave ,,,If the Microsoft: Activision tie-up is anything to go on, the UK might object and then be pushed into acceptance by the weight of other pressures. This is a good first step in another major part of the long-overdue VOD rationalisation process.
Yet another incomprehensibly stupid decision by the LLOY board??
I hold both LGEN and MNG (which are comparable to SW) on the basis that they are stable, profitable businesses throwing off lots of cash and in an environment where interest rates are rising and likely to stay high by recent historical trends, the ability of large tranches of "safe" Government bonds to generate revenues adequate to meet pension liabilities is greater than it has been for a decade. Granted that means that Scottish widows will fetch a better price than it would have done a few years ago BUT the question is what does LLOY plan to do with the money if a sale is completed? For the sake of all holders here I do hope it's not to buyback yet more shares at a higher price than the market deems appropriate in a desperate bid to shore up the SP, as they have done for the last few years,
for those interested the figures for Scottish widows are here:
https://www.lloydsbankinggroup.com/assets/pdfs/investors/financial-performance/other-subsidiaries/2022/full-year/2022-swg-annual-report.pdf
As you can see, SW produced a revenue of £ 500 million+, so if a sale takes place I would expect a valuation of upwards of £5bill.
Gwm no, held ggp for a while some years ago but sold at 30p ish, won't go back, hold gold in sovereigns (promised to the grandkids) these days. Folio is now biased toward bonds ,US Treasuries, prefs, high yield stocks, stable , low volatility, Preserving wealth rather than building it.
Lots of people missing the point, yes VOD has debts , but it used (maybe unwisely) those funds to buy revenue-producing assets, such that last year's earnings of 42p per share gave a divi cover of >5 times. That situation is unlikely to continue, but future earnings will still provide significant dividend cover assuming, as I do, that earnings are likely to rise faster than divis.
I don't expect to see meteoric SP improvement here, but I do expect a gradual rationalisation of the company, stable to rising revenues in a market that most people regard as one of life's essentials. I hold ad part of a recession proof, high-yield, low-risk portfolio.
Further to yesterday's posts, I've been taking a look at VOD's debt profile. the data is here if you are interested.
https://investors.vodafone.com/debt-investors/bonds-outstanding-eu-and-us
The good news is that much of it is at below , in some cases well below, the current rate of interest, and as VODs revenues are likely to be priced at around or above the rising interest rates , debt as a percentage of revenue should fall over the next few years.
The bad news is that some of the debt will need to be repaid or rolled over in the next couple of years and that will come at sharply higher rates of interest.
There is also the problem of exchange rates , VOD holds debt in sterling, euros , Japanese yen, and dollars, and the dollar-denominated stuff is going to create some pain if cable remains where it is (and I suspect it will or even fall).
So, what conclusions: VOD is going to be saddled with significant debts for some time and the only way of making major dents in that is to sell assets. VOD has a plethora of assets but the biggest are clearly in Germany, UK, and Italy. In the UK the proposed merger with three should reduce costs but won't return cash. So, Is Italy the next asset to be put up for sale?
LTI, the point you seem utterly unable to get is that while buybacks reduce the number of shares in issue and, if the market cap. remains stable, then IN THEORY, the value of each share should rise. LLOY has demonstrated unequivocally, that expending £ 3.2 billion on reducing the number of shares in issue has had NO positive effect on the value of each share. No matter how you cut it that is the only logical conclusion to draw.
I will not bother to reply to any convolute and implausible logic you offer to refute the blindingly obvious.
Fleccy. interesting stats. What they tell us is that, over a little under 3 years LLOY has taken out 10% of the shares at a cost of about £ 3.2 billion while the market cap has reduced from about £30 bn to £ 25bn. Is that what you were seeking to demonstrate?
Newsid... in reply to your query here is a copy of a post of mine re the tie-up with three, from May of this year which explains(I think) why Vod is trying to extricate itself from Spain and tie up with three in the uk. Those are the two "challenging markets "
Reposted from 4th may
"This long-awaited development seems finally upon us and there are a couple of points worth making. First I expect that the parties have been in touch with UK authorities and have tacit agreement that the deal will be approved, there may be conditions but essentially it will IMV, be approved in its current form.
Second an examination of VOD's last annual accounts for FY 22 show that its international revenues were : Germany 30%(of total revenues) margin43%, UK 13% margin21%, Italy11%, margin33%, Spain10%, margin23%.......(sorry for the formatting- I have tried formatting tables on this site before and they come out unintelligible)
However, I hope it is clear that VOD make decent margins in Germany and Italy and much less so in the UK and Spain.......guess why they are planning to rationalise the UK market to one less player!!!"
See
https://www.londonstockexchange.com/news-article/VOD/sale-of-vodafone-spain/16188396
Vod will receive 5 bn euros , (4.1 bn cash plus 0.9bn Zegona prefs)
this long-awaited news is another step in simplifying and reducing Vod's mish-mash of holdings.
The net effect should be to reduce Vods enormous debt pile of 33bn euros by about 10%. all else equal that should reduce annual debt service costs by about 150-200 mill euros pa. Not enormous(last year's figs showed debt service costs of 1.7bn euros) but at least (at last?) heading in the right direction.
Effect on SP this am - who knows? but should be a positive if only for the recognition that current management are tidying up an unholy mess.
I hold, largely as a significant divi payer, may add.
Https://markets.ft.com/data/equities/tearsheet/charts?s=LLOY:LSE
How much patience do you need?